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Korea Memorandum Of Understanding Regarding Foreign Motor Vehicles

EXECUTIVE OFFICE OF THE PRESIDENT

THE UNITED STATES TRADE REPRESENTATIVE

WASHINGTON, D.C. 20508

October 20, 1998

The Honorable Lee Hong-koo

Ambassador of The Republic of Korea

2450 Massachusetts Avenue, NW

Washington, D.C. 20008

Dear Ambassador Lee:

As the result of our recent consultations, representatives of our governments have reached agreement on the attached Memorandum Of Understanding (MOU), which sets forth measures that our respective governments will take to improve market access for foreign motor vehicles into the Korean market. In addition, we were pleased to receive Minister Han's letter of October 19, 1998 describing the wide range of economic reform measures, including structural reforms of the financial and corporate sectors, that the Government of Korea (ROKG) is implementing.

I am pleased to confirm that these documents represent my government's understanding of the results of our consultations and the measures that the ROKG is taking to resolve our trade concerns.

Please confirm that your government shares our understanding that these documents represent the results of our consultations and the measures that the ROKG is taking to resolve our trade concerns.

Sincererly,

/s/

Richard W. Fisher

Acting

EMBASSY OF THE REPUBLIC OF KOREA THE WASHINGTON, D. C.

THE AMBASSADOR

DR. LIEE

Oct. 20, 1998

Dear Ambassador Fisher:

I am pleased to confirm receipt of your letter of this date which reads as follows:

"Dear Ambassador Lee:

As the result of Our recent Consultations, representatives of our governments have reached agreement on the attached Memorandum of Understanding (MOU), which sets forth measures that our respective governments will take to improve market access for foreign motor vehicles into the Korean market In addition, we were pleased to receive Minister Han's letter of October 19, 1998 describing the wide range of economic reform measures, including structural reforms of the financial and corporate sectors, that the Government of IV Korea (ROKG) is implementing.

I am Pleased to confirm that these documents represent my government's understanding of the results of our consultations and the measures that the ROKG is taking to resolve our trade concerns.

Please confirm that your government shares our understanding that these documents represent the results of our consultations and the measures that the ROKG is taking to resolve our trade concerns.

Sincerely,

Richard W. Fisher

Acting"

I have the honor to confirm that my government shares the understanding of the United States Government that the documents referred to in your letter represent the results of our consultations and the measures that the ROKG is taking to resolve trade concerns regarding the motor vehicle industry.

Sincerely,

/s/

UNITED STATES OF AMERICA-REPUBLIC OF KOREA MEMORANDUM OF UNDERSTANDING REGARDING FOREIGN MOTOR VEHICLES IN THE REPUBLIC OF KOREA

I. GOALS AND GENERAL POLICIES

A. The goals of this Memorandum of Undemanding (MOU) are as follows:

1 . Overall, to:

a. Substantially increase market access for foreign motor vehicles in the Republic of Korea (ROK); and

b. Establish conditions so that the ROK's motor vehicle sector operates according to market principles.

2. Specifically, to:

a. Simplify the Government of the Republic of Korea's (ROKG) tax regime in a manner that enhances market access for foreign motor vehicles;

b. Improve the perception of foreign motor vehicles in the ROK;

c. Simplify and streamline the ROKG's type-approval procedures for foreign motor vehicles, (develop and establish in the ROK a trade- facilitating self-certification process for motor vehicle manufacturers, adopt and use internationally recognized standards and regulations in the ROK, and ensure the transparency and predictability of the ROKG's current and future standards and certification procedures for motor vehicles; and

d. Establish in the ROK a mortgage system for motor vehicles that permits, in the event of default, foreclosure and disposal of the mortgaged vehicle in a timely, cost-efficient and commercially reasonable manner. Such system also will provide due process to protect the interests of both the lender and the borrower, and will include an effective means to provide notice of the mortgage status of a motor vehicle.

B. The ROKG agrees to take all necessary steps to implement this MOU fully and effectively. ne ROKG also agrees that it will not take any other measures that, directly or indirectly, adversely affect market access for foreign motor vehicles.

C. The ROKG and the Government of the United States of America (USG) (the Parties) will implement all the measures of this MOU on a most-favored-nation basis.

D. The Annexes are an integral part of this MOU.

Il. MEASURES REGARDING MOTOR VEHICLE TARIFFS AND TAXES

A. Tariffs

1. Within 30 days after entry into force of this MOU, the ROKG will notify the World Trade Organization (WTO) that the ROKG is modifying its WTO market access schedule (Schedule LX) to bind the ROKG's current applied tariff rate of 8 percent on motor vehicles.

2. The ROKG will actively participate in multilateral negotiations aimed at reducing or eliminating tariffs on motor vehicles.

B. Taxes

1. Annual Motor Vehicle Registration Tax

The ROKG will, effective March, 1999, reduce the annual vehicle registration tax for all motor vehicles with engine displacements of greater than 2000cc's to a maximum of 220 Won per cc and will not increase the differential between engine-displacement-based categories.

2. Equalization of Subway Bond Rate The ROKG confirms that it has equalized the rate of the Subway Bond for 0 domestic and foreign motor vehicles within categories.

3. Elimination of Education Tax and Rural Development Tax

The ROKG confirms its intention to eliminate and not to reintroduce the Education Tax levied on the Registration Tax and the Special Tax for Rural Development levied on the Acquisition Tax, effective in January 1999.

4. Reduction of Special Consumption Tax The ROKG confirms that it reduced the Special Consumption Tax by 30 percent in July 1998, and that the ROKG will continue this tax reduction on motor vehicles until at least July 2005.

5. Longer Term Objectives

The ROKG confirms that its general long-term policy is to steadily reduce the tax burden on motor vehicle owners in the ROK in a way that advances the objectives of this MOU.

6. Phase-in of Tax Increases on Minivans

The ROKG will reclassify minivans as passenger vehicles effective on January 1, 2000. The increase in the Annual Vehicle Registration Tax and Subway Bond, will be phased-in over three years in equal annual increments beginning no sooner than January 1, 2005.

III. MEASURES TO IMPROVE PERCEPTION OF FOREIGN MOTOR VEHICLES

A. The ROKG reaffirms that it is not its policy to discourage in any way the purchase or use of foreign motor vehicles in the ROK. The USG notes the proactive initiatives the ROKG has undertaken to improve the perception of imports, including foreign motor vehicles, in the ROK. Examples of such initiatives are set forth in Annex 1.

B. The ROKG will continue such initiatives and continue to make efforts to:

1. address effectively and expeditiously instances of anti-import activity associated with foreign motor vehicles, including instances in which USG officials or other interested parties provide relevant information to the Ministry of Foreign Affairs and Trade (MOFAT);

2. preclude discrimination against foreign motor vehicles and individuals associated with them by means of tax audits and other measures; and

3. encourage publicly the equal treatment of foreign and domestic motor vehicles and the individuals associated with them through such means as direct outreach to civic groups.

C. Also, the ROKG will promote actively a better understanding among its citizens of the benefits to the ROK consumer and economy of free trade and open competition between foreign and domestic products, including motor vehicles. These promotion efforts will include dialogue with ROK citizens, such as in town meetings and educational institutions or through other means.

IV. MEASURES REGARDING STANDARDS AND CERTIFICATION PROCEDURES

A. Simplification and Streamlining of Type-approval Procedures

1. Change in "Safety Compliance Test Threshold"

Effective April 1, 1999, the safety compliance test threshold for imported motor vehicles will be raised from the current 1,000 units to 1,500 units per model per calendar year. Effective January 1, 2000, the safety compliance test threshold for imported motor vehicles will be raised to 2,000 units per model per calendar year, and effective January 1, 2001, the safety compliance test threshold for imported motor vehicles will be raised to 2,500 units per model per calendar year. In the interest of transparency, the list of documents to be provided in connection with "basic vehicle 3 type" approval and safety compliance for high and low volume imports is provided in Annex 2.

2. Simplification of Safety Compliance Test

a. Below Threshold Requirements

The ROKG confirms that foreign motor vehicle manufacturers with models entering the ROK in volumes below the safety compliance test threshold will continue to be exempted from the safety compliance test. For such vehicle models, manufacturers will be required to submit only a "manufacturer's certificate of compliance" certifying that their products are in compliance with ROKG safety standards or standards that the ROKG determines to be equivalents of ROKG standards (hereinafter referred to as equivalents). Current equivalents are set out in Annex 3.

b. Above Threshold Requirements

(1) For existing and new ROKG safety standards Tor which the USG has or adopts FMVSS that are equivalents, the ROKG confirms that it will continue to accept a "manufacturer's certificate of conformity" certifying that the manufacturer's motor vehicles comply with those equivalents. This certificate will be sufficient to meet the documentation requirements of the safety compliance test. For example, the ROKG confirms that it will continue to accept a manufacturer's certificate of conformity to certify that foreign motor vehicles meet the ROKG standards on accelerator control system; interior compartment door; and wiper, washer, defog and defrost.

(2) For existing and new ROKG safety standards for which only Economic Commission for Europe (ECE) or European Economic Community (EEC) equivalents exist or are adopted by the EC in the future, the ROKG will accept an "E-certificate" to meet the documentation requirements of the safety compliance test. If an E-certificate has not been issued to the manufacturer, the ROKG will accept a "manufacturer's test report' to meet such documentation requirements, provided that the testing was conducted at a "test site or laboratory approved by ECE authorities for type-approval testing." These documentation provisions will apply to the existing towing device, rear under run protection, speedometer test, and electromagnetic compatibility standards.

(3) For existing and new ROKG safety standards for which there are only ISO/SAE equivalents, current or future, the ROKG will accept a manufacturer's test report demonstrating that the manufacturer's motor vehicles comply with those equivalents as sufficient to meet the documentation requirements of the-safety compliance test. In the case of the engine power standard, the ROKG will continue to accept a manufacturer's certificate of conformity without a test report.

c. Headlamp Standards

(1) The ROKG will promptly adopt the harmonized U.S./EC standard for headlamps when such standard is completed.

(2) Prior to such adoption, the ROKG will continue to accept vehicles with headlamp light intensity ranging from 20,000 candela to 112,500 candela.

(3) Also, effective July 1, 1999, the ROKG will accept motor vehicles with headlamps meeting the beam pattern standard in FMVSS 108 (1997. 10, 1) and as amended.

d. Elimination of Five Safety Standards

The ROKG confirms that it has eliminated and will not replace the following five safety standards for all motor vehicles' except buses, trucks and special purpose vehicles: (1) Acceleration test; (2) Climbing steep hill test; (3) Maximum speed test; (4) Minimum turning radius test; and (5) Maximum stable inclination angle test.

e. Elimination of Requirement on Exhaust Pipe Inclination

The ROKG confirms that it has eliminated one of two requirements on exhaust pipe inclination. Specifically, the ROKG eliminated the requirement of a maximum downward inclination of 30 degrees. The requirement mandating a maximum leftward. inclination of 30 degrees remains unchanged.

3. Waiver of Completion Test

a. The ROKG confirms that the Ministry of Construction and Transportation allows foreign motor vehicle manufacturers and importers it has designated as having adequate technical personnel and facilities to conduct the completion test. The Ministry of Construction and Transportation will continue to designate importers and manufacturers to conduct the completion test if the importer or manufacturer has adequate technical personnel and has contracted with a "First-Rate Motor Vehicle Repair Company" having adequate facilities.

b. Effective April 1, 1999, the ROKG will waive the completion test if a motor vehicle manufacturer submits certification documentation. Such documentation will consist of. (1) an application form; (2) a check list of those manufacturer's quality control procedures related to the completion test elements; and (3) a comparison document certifying that each element of the completion test is tested for in the manufacturer's own quality control procedures. The elements of the completion test are set forth in Annex 4. This certification documentation will only be required once for each manufacturer.

4. Elimination of Items in Detailed Specification Table

The ROKG confirms that the number of items on the Detailed Specification Table (DST) was reduced from 319 to less than 200. Such number of items will not be increased, but items relating to new technology may be added to the DST. The items now included in the DST are set forth in Standard Form No. 20 (October 4, 1996) attached to the Ministerial Regulations pursuant to the Motor Vehicle Management Act.

5. Simplification of Requirements Associated with "Basic Vehicle and Modified Vehicle Type" Approval

a. The ROKG confirms that:

(1) Foreign motor vehicle manufacturers are not required to submit any documents to the Ministry of Construction and Transportation relating to basic vehicle or modified vehicle type approval if such documents have already been submitted to the Korea Automotive Testing and Research Institute (KATRI);

(2) Motor vehicle manufacturers are not required to resubmit documents that were previously presented for basic vehicle type approval to either the KATRI or the Ministry of Construction and Transportation if a previously approved model is modified, but its body and frame are kept the same;

(3) Type approval for modified vehicle type will be given at the same time that basic vehicle type approval is granted.

b. The ROKG confirms that the number of specific modifications subject to modified vehicle type approval. when the body and frame remain the same, was reduced from 35 to eight. These eight modifications are set out in Annex 5. Modifications other than these eight must be reported to applicable authorities, but will not be subject to modified vehicle type approval requirements.

c. The ROKG confirms that the total documentation required for the basic vehicle type approval of foreign motor vehicles, except for buses and special purpose vehicles, entering the ROK in volumes below the safety compliance threshold was reduced from 90 to 20 pages by permanently eliminating the requirement concerning the submission of (1) drawings for 15 items relating to a vehicle's main construction and devices, and (2) a manufacturer's certificate of conformity for six safety standards.

6. Elimination of Durability Test

The ROKG confirms that it has eliminated the 20,000 km durability test and will not reintroduce this or any other durability test.

7. Test Site Visit Requirements

The ROKG will not require a test site visit as a condition for the acceptance of a manufacturer's certification that it has complied with safety standards.

8. Changes to Environmental Standards and Streamlining of Environmental Certification

a. Changes to Noise Standards and Conformity Assessment Procedures

(1) For motor vehicle models that passed a 77 decibel pass-by noise standard prior to January 1, 1996, the ROKG will continue to apply this standard.

(2) For other motor vehicle models, the ROKG will continue to require compliance with a pass-by noise standard that is no stricter than 75 decibels until January 1, 2003.

(3) Prior to the ROKG's adoption of the ISO 362 - Acoustics Measurement of Noise Emitted by Accelerating Road Vehicles - Engineering Method, ie., the ISO 362 pass-by noise conformity assessment procedure, the ROKG will accept motor vehicle models that have passed "stringent conformity assessment procedures" to determine compliance with the pass-by noise standard.

(4) No later than January 1, 2002, the ROKG will adopt the ISO 362 pass-by noise conformity assessment procedure. Ile ROKG will also adopt a 2 decibel variance in this procedure. The ROKG will not require compliance with a 74 decibel pass-by noise standard before January 1. 2003.

(5) The ROKG will permit the following entities to conduct the conformity assessment procedure to determine compliance with the pass-by noise standard and will accept the results:

i. the United States Environmental Protection Agency (EPA);

ii. an independent testing facility certified by the EPA; or

iii. a manufacturer, provided that the EPA or authorities recognized by the ECE certify that the manufacturer properly follows the conformity assessment procedure.

b. Streamlining of Environmental Certification and Periodic Inspections

(1) Initial Environmental Certification

i. The documents required to apply for initial environmental certification now are contained in standardized tables. The number of documents in the application package has been reduced from 100- 150 pages to approximately 70 pages.

ii. For initial environmental certification for a new motor vehicle model within an engine family, at the request of a manufacturer, the ROKG will permit the manufacturer to conduct the environmental testing, provided that, the Ministry of Environment (MOE) oversees the testing.

iii. EPA-certified test results for the deterioration factor for emissions are now accepted as part of environmental certification documents.

(2) Modified Environmental Certification

The manufacturer's test report can be submitted in lieu of MOE's environmental certification tests. In exceptional cases in which the manufacturer has provided falsified data or data that is not credible, the MOE will conduct the required tests or will oversee the testing process as necessary.

ii. Modifications that do not significantly affect the vehicle's level of noise or emissions are exempt from the certification requirement. Instead, manufacturers now are required only to report such modifications and the MOE will provide a modified environmental certification. The regulations concerning this exemption are specified in MOE Notice No. 1998-21.

(3) Periodic Environmental Inspections

i. Foreign motor vehicles that have entered into mass production are no longer subject to initial spot-check inspections conducted by MOE upon importation.

ii. The number of imported motor vehicles exempted from the manufacturer's assembly line inspection is 500 units. The number of units imported from a manufacturer is determined on a cumulative basis for each model within an engine family from the date of the first import of such model.

(4) Elimination of Endorsement Requirements Foreign motor vehicle manufacturers no longer are required to obtain an official endorsement from the ROKG diplomatic mission in their home country certifying that copies of any documents conform with the originals.

The ROKG will continue to officially recognize those documents that are duly signed by a representative of the manufacturer on behalf of the manufacturer's Chief Executive Officer.

(5) Establishment of Internet E-Mail Application System

Starting from the year 2000, the ROKG will initiate the project for the establishment of an Internet e-mail system for processing environmental certification applications. No later than the year 2003, an on-line certification application and processing system will be in operation which will be similar to that utilized by the United States EPA.

c. Testing Facility Inspection

Upon entry into force of this MOU, the ROkG will modify its current system of testing facility inspection for compliance with environmental standards (noise, emissions and deterioration factor) and will require inspection at an environmental test site only once every three years.

9. Preclusion of Additional Documentation or Data Requirements

The ROKG will not require any additional documentation or data for type approval to establish compliance with the standards referred to in this MOU.

B. Development and-Establishment of "Self-certification" System

1. Development

a. KATRI Report

The KATRI will complete, by the end of 1999, a report containing the proposed elements of the ROKG's self-certification system.

b. Dialogue

To assist the KATRI in its study concerning the development of the ROKG's self-certification system and related measures, the Parties will, upon entry into force of this MOU, establish a dialogue for the ongoing exchange of information on the elements and functioning of the ROKG's self-certification system. Participants in this dialogue will include ROKG and USG officials and U.S. motor vehicle manufacturer representatives. This dialogue will continue until 3 years after the establishment of the ROKG's self-certification system, and participant§ will meet once a year, or more frequently at the request of either Party.

2. Establishment

No later than the year 2002, the ROKG will introduce a self-certification system. This self-certification system will facilitate trade, while ensuring that safety assurance requirements are met.

C. Participation in International Harmonization of Standards and Regulations and Use of International Standards

1. Participation in UN-WP 29 Talks

The ROKG will actively participate in the Economic Commission for Europe Working Party 29 (UN-WP 29) talks.

2. Signing "Global Agreement"

The ROKG will sign the Agreement Concerning the Establishing of Global Technical Regulations for Wheeled Vehicles, Equipment and Parts )Which Can be Fitted and/or be Used on Wheeled Vehicles, commonly referred to as "the Global Agreement," within twelve months after the date by which the United States, the EU and Japan have signed the Agreement.

3. Reaffirmation of International Obligations on Use of International Standards

The ROKG reaffirms its commitment to implement fully and faithfully Article 2.4 of the WTO Agreement on Technical Barriers to Trade (TBT Agreement).

D. Ensuring the Transparency and Predictability of Changes to Existing, or Introduction of New Standards and Certification Procedures

The ROKG reaffirms its commitment to implement fully and faithfully Articles 2.9 through 2.12, with respect to technical regulations, and Articles 5.6 through 5.9, with respect to conformity assessment procedures, of the TBT Agreement. The ROKG will use its Offlcial Gazette for this purpose.

E. Ensuring that ROK Standards and Certification Provisions Do Not Unnecessarily Restrict Trade

The ROKG will ensure that measures relating to the provisions in subsections A-D of this Section will not be applied in such a manner as to restrict trade or have the effect of creating unnecessary obstacles to international trade in foreign motor vehicles.

V. MEASURES TO INTRODUCE AN EFFICIENT MORTGAGE SYSTEM FOR MOTOR VEHICLES

A. Introduction of Mortgage System for Motor Vehicles

The ROKG will permit motor vehicles, including foreign motor vehicles, to be subject to mortgages and will create an efficient mortgage system that protects the interests, of both the mortgagee (lender) and mortgagor (borrower). The ROKG will take necessary measures to establish, for mortgaged motor vehicles, efficient, expeditious and commercially reasonable foreclosure procedures consisting of existing court-ordered seizure and a disposal method that is an alternative to the public auction sale (alternative disposal method). The ROKG estimates that these - foreclosure procedures, including disposal of the seized vehicle, would be. completed in four months or less. Any fees or other charges related to the cost of obtaining, registering or maintaining a mortgage on a motor vehicle will be based on the cost of the service provided. The tax and fee for registering a mortgage on a motor vehicle under this new system will not exceed 0.2 percent and 0.4 percent respectively, of the mortgage amount.

B. Establishment of Effective Foreclosure Procedures

1. Amendment of Automotive Vehicle Mortgage Act

The ROKG will submit a proposal, by the end of March 1999, to amend the Automotive Vehicle Mortgage Act for consideration by the National Assembly. The ROKG expects that the National Assembly will complete action on this proposal by the end of 1999. The legislative proposal will include provisions that introduce the alternative disposal method. Under this method, upon a motion by the lender, the court may authorize that the seized motor vehicle be sold to the lender.

2. Aspects of Alternative Disposal Method

a. The lender will be permitted to initiate the alternative disposal method by filing a motion with the court for a "decision," including an offer to purchase the mortgaged motor vehicle. The lender will submit simple documentation demonstrating that the lender holds a mortgage on the motor vehicle and that the borrower is in default. A motion for decision may be granted based on these documents without a pleading or hearing.

b. The court will issue a decision and notify the borrower and order a bailiff to seize the mortgaged motor vehicle. After seizure, the court will establish a minimum bid price by consulting, with an independent expert appraiser who will recommend a minimum bid price that could facilitate the disposal of the mortgaged motor vehicle.

c. The lender may decide to pay the minimum bid price and obtain ownership of the mortgaged motor vehicle. The lender may use any unpaid portion of the mortgage in the satisfaction of the minimum bid price.

d. If the price paid exceeds the outstanding amount of the mortgage and court costs, the court will distribute such excess.

C. Institution of Effective Mortgage Status Notification System

1. Maintenance of Data Base

The ROKG will continue to maintain a central, easily accessible, , government data base containing motor vehicle registrations registration data base.

2. Information Included

The ROKG will require that the information contained in the electronic file and the "Certificate of Registration" sets forth the most current information provided by the lender on the mortgage status of the registered motor vehicle. The information in the electronic file will include the names of the lender and the borrower, the initial amount of the mortgage and the date of registration of the mortgage. The Certificate of Registration will indicate that the vehicle is mortgaged, will include the date of registration of the mortgage and will state that additional information on the mortgage status of the motor vehicle is available in the registration data base.

3. Access to Information on Mortgage Status

The ROKG will provide parties with a demonstrable interest in the mortgage status of a motor vehi&, including the current borrower, current and potential lenders or a potential purchaser or guarantor, easy access to the information in the registration data base.

4. Notification of Central Data Base and Modification of Documents

Upon receiving information from the lender on the mortgage status of the motor vehicle, the ROKG will update the information in the registration data base.

D. Public Awareness of Motor Vehicle Mortgage System

The ROKG will publicize the details of this motor vehicle mortgage system, including the mortgage status notification provisions, in the Official Gazette.

VI. CONSULTATIVE PROVISIONS

A. The Parties will hold consultations once a year, or more frequently based on the request of either Party, to discuss institutions, goals, policies and measures in the ROK relating to the implementation of this MOU and other matters relating to the Korean motor vehicle sector. Matters covered in these consultations will include, but are not limited to, the goals and general policies of this MOU; ROKG motor the vehicle tariffs and taxes; measures to improve perception of foreign motor vehicles in the ROK; ROKG standards and certification procedures relating to motor vehicles; measures to introduce an efficient mortgage system for motor vehicles; and the effect of the ROKG's economic reform measures on the motor vehicle sector in the ROK. The first round of consultations will be held not later than April 30, 1999.

B. Prior to the introduction of any ROKG measures that affect market access for foreign motor vehicles in the ROK, the ROKG agrees to provide information to the USG in a timely manner on such measures.

C. The Parties also will evaluate the progress being made under this MOU and will monitor market access for foreign motor vehicles in the ROK.

D. In monitoring and assessing market access for foreign motor vehicles in the ROK, both Parties will consider, inter alia:

1. the change in the number and value of new foreign motor vehicles sold in the ROK in total and by country of export as measured, using a registration-based methodology, by ROK, United States and other foreign country official statistics and other publicly available data;

2. specific official actions to improve the perception of foreign motor vehicles in the ROK; and

3. implementation of all other goals policies, and measures referred to in paragraph A.

E. Each Party shall immediately communicate the results of these consultations to their respective Ministers and Governments.

F. At the first consultations held under this MOU, the Parties will discuss whether critical difficulties exist regarding the application of the provisions in Section IV of this MOU--Measures Regarding Standards and Certification Procedures--to minivans and how to address these difficulties.

VII. DEFINITIONS

A. "Motor vehicle" means vehicles covered by Heading 87.03 of the International Convention on the Harmonized Commodity Description and Coding System (known as the Harmonized System Convention), concluded on June 14, 1983 at Brussels, Belgium. This encompasses motor cars and other motor vehicles principally designed for the transport of persons, including minivans and -sport utility vehicles with a seating capacity of 9 or less.

B ."Safety compliance test threshold" means the maximum number of imported vehicles of a particular model for a particular calendar year that are exempted from testing and from providing documentation other than a manufacturer's certificate of compliance to demonstrate compliance with safety standards.

C. "Manufacturer's certificate of compliance" means a document corresponding to Form No. 1 (December 26, 1996) annexed to Ministerial Notice 1997-18.

D. "Manufacturer's certificate of conformity" means a document that provides assurances from individual manufacturers that a vehicle model was manufactured to comply with U.S. Federal Motor Vehicle Safety Standards (FMVSS). Certificates of conformity are not required by the U.S. Government and therefore will be produced in individual company formats; however, such certificates include descriptions of the subject vehicle model, the particular standard identification, and the title, names and signatures of the individuals who certify that the vehicle model complies with the specific standard. A representative of the manufacturer is permitted to sign the manufacturer's certificate of conformity on behalf of the manufacturer's Chief Executive Officer. A manufacturer's certificate of conformity for motor vehicles produced in a third country will include a certification from the manufacturer's headquarters that such vehicles meet FMVSS and a "summary of data".

E. "Summary of data" means a brief conclusory presentation of the manufacturer's test results and the conclusions reached for relevant safety standards. Such presentation shall typically not be required to exceed one page.

F. "E-certificate" means a document issued by the type-approval authority to the manufacturer or component supplier to certify that the component, system and, in the case of the EC-Whole Vehicle Type Approval, the complete vehicle, meets the requirements contained in the relevant UN-ECE or EEC regulations.

G. "Manufacturer's test report" means a report provided by an individual manufacturer that sets out information that demonstrates that a vehicle model meets the requirements of a specific standard. Such information could include a report from an independent test facility.

H. "Test site or laboratory approved by ECE authorities for type-approval testing" means a manufacturer's own test facility, which is approved for testing by ECE type-approval test authorities, and at which ECE type-approval test authorities witnessed the testing, or an "independent test facility" which is approved by ECE test authorities.

I. "Independent test facility" means a test facility that is not affiliated with a motor vehicle manufacturer.

J. "Basic vehicle type" means a motor vehicle with the basic, standard frame and body for a particular model of motor vehicle.

K. "Modified vehicle type" means a vehicle that has been modified from a basic vehicle type, but the body and frame are unchanged.

L. "Stringent conformity assessment procedures" mean procedures used to determine whether a motor vehicle meets the pass-by noise standard. Such procedures include the pass-by noise conformity assessment procedures being employed by the ECE or the ROK, or the procedures provided for under ISO 362.

M. "Self-certification system" means a conformity assessment system that relies upon the use of a supplier's/manufacturer's written declaration of conformity as assurance that the product complies with the applicable safety standards and/or regulations. The supplier's/manufacturer's declaration of conformity will be based on (1) the results of testing, analysis or inspection that the manufacturer undertakes or authorizes others to undertake on its behalf; and (2) the manufacturer's implementation of a comprehensive quality control system.

N. "Certification of Registration" means the ROK document that indicates ownership of a motor vehicle. This document, by law, remains in the possession of the motor vehicle owner.

0. "Registration-based data" means the statistics now collected by the ROKG on motor vehicles registered in the ROK. By November 1998, this data will include the country of origin, manufacturer, model and engine size of the motor vehicle. By the end of 1999, additional data and combinations thereof will be available in a nation-wide computerized network.

ANNEX 1

ROKG INITIATIVES TO IMPROVE THE PERCEPTION OF IMPORTS

1. On February 23, 1998, the Ministry of Foreign Affairs (MOFA) sent a document to the Board of Audit and Inspection noting that any measures which can be misperceived as discriminating against foreign products should not be taken.

2. On February 26, 1998, the then Ministry of Trade, Industry and Energy (MOTIE) sent a document to 13 government agencies and to 12 civic groups noting that the frugality campaign should not degenerate into an anti-import campaign.

3. On March 17,1998, the Ministry of Foreign Affairs and Trade (MOFAT) sent a document to 16 government agencies noting that an anti-import campaign is not desirable for Korea's efforts to overcome the current economic crisis and that any measures discriminating against imports should be avoided.

4. On May 2, 1998, the MOFAT sent a document to the Office of National Tax Administration noting that any measures targeting the owners of foreign vehicles should not be conducted.

ANNEX 2

Documentation Required for Basic Vehicle Type Approval for Low and High Volume Imports

A.Low Volume imports (volume below the safety compliance test threshold)

(1) Application form

(2) Specification table

(3) Detailed specification table

(4) External view of the vehicle

(5) After-sale plan (submitted once upon the manufacturer's first application for basic vehicle type approval)

(6) Manufacturer's certificate of compliance

(7) Drawing of body/frame (applicable to buses, trucks and special purpose vehicles)

B. High Volume Imports (volume above the safety compliance test threshold)

(1) Application form

(2) Specification table

(3) Detailed specification table

(4) External view of the vehicle

(5) After-sale plan (submitted once upon the manufacturer's first application for basic vehicle type approval)

(6) Documentation certifying compliance with the Safety Compliance Test

(7) Drawing of body/frame (applicable to buses, trucks and special purpose vehicles)

ANNEX 3

Elements of Safety Compliance Test, Equivalents and Required Documentation for High Volume Imports

(Equivalents as of October 20, 1998)

TEST ITEM

KOREAN
STANDARD

U.S STANDARD

REQUIRED DOCUMENTATION

REMARK

1/ Occupant Crash Protection

MVSS 102

FMVSS 208

Certificate of Conformity

---------

2/Steering Control Rearward Displace-
ment in Collision

MVSS 89

FMVSS 204

Certificate of Conformity

----------

3/Fuel Leakage in Collision

MVSS 91

FMVSS 301

Certificate of Conformity

----------

4/Windshield Mounting in Collision

MVSS 105

FMVSS 212

Certificate of Conformity

----------

5/ Windshield Zone Instrusion

MVSS 105

FMVSS 219

Certificate of Conformity

----------

6/Seats and Seats Anchorages

MVSS 97

FMVSS 207

Certificate of Conformity

----------

7/Head Restraints

MVSS 99

FMVSS 202

Certificate of Conformity

----------

8/Door Retention System

MVSS 104

FMVSS 206

Certificate of Conformity

----------

9/Instrument Panel Impact Absorption

MVSS 88

FMVSS 201

Certificate of Conformity

----------

10/Seat Back Impact Absorption

MVSS 98

FMVSS 201

Certificate of Conformity

----------

11/Armrest Impact Absorption

MVSS 100

FMVSS 201

Certificate of Conformity

----------

12/Sun Visor Import Absorption

MVSS 101

FMVSS 201

Certificate of Conformity

----------

13/Bumper

MVSS 93

Title 49 CFR Part 581

Certificate of Conformity

----------

14/Inside Rearview Mirror Impact Reduction

MVSS 108

FMVSS 111

Certificate of Conformity

----------

15/Steering Impact Absorption

MVSS 89

FMVSS 203

Certificate of Conformity

----------

16/Slide Door Strength

MVSS 104

FMVSS 214

Certificate of Conformity

----------

17/Roof Crush Resistance

MVSS 92

FMVSS 216

Certificate of Conformity

----------

18/Seat Belt Anchorages

MVSS 103

FMVSS 210

Certificate of Conformity

----------

19/Towing Device

MVSS 20

------------

E-Certificate or Manuf. Test Report

EEC 77/389

20/Rear Underun Protection

MVSS 96

------------

Certificate of Conformity

EC/EEC equivalent exists/required for commercial only

21/Lighting/Signaling Devices

--------

-------------

---------------

----------

21.1/
Headlamp

MVSS 38, 106

FMVSS 108

Certificate of Conformity

ECE 1, 2, 5, 8, 20, 31, 37, or EEC 76/761

21.2/
Auxiliary Headlamp (Fog Lamp--Optional

MVSS 38, 106

-----------

--------------

ECE 19/
Optional

21.3--21.11
/Signaling Equipment

MVSS 39-44, 106 &107

FMVSS 108 1/

Certificate of Conformity

----------

22/Field Vision

MVSS 50, 94

FMVSS 111

Certificate of Conformity

EEC 77/649

23/Engine Power

MVSS 111

ISO 1585 or SAE 1349

Certificate of Conformity

Introduced 1/97

24/Wipers, Washers, Defog, Defrost

MVSS 109

FMVSS 103, 104

Certificate of Conformity

Introduced 1/97

25/
Acceleration

MVSS 87

FMVSS

Certificate of Conformity

Introduced 1/97

26/

Minimum Turning Radius

MVSS 9

-------------

----------------

Korean standard
/required for commercial only

27/Fuel Economy Test

 

Title 40 CFR Part 600

Certificate of Conformity

----------

28/
Stopping Distance

MVSS 90

FMVSS 105 or 121

Certificate of Conformity

Approved Additionally

29/Service Brake Efficiency

MVSS 90

FMVSS 105 or 121

Certificate of Conformity

Approved Additionally

30/Parking Brake Efficiency

MVSS 90

FMVSS 105 or 121

Certificate of Conformity

Approved Additionally

31/Brake Warning Device Test

MVSS 90

FMVSS 105 or 121

Certificate of Conformity

FMVSS 121 Approved Additionally

32/Compressed Air Capacity Test for Brake System

MVSS 90

FMVSS 121

Certificate of Conformity

Approved Additionally/required for commercial only

33/Brake Efficiency Test in Warning State

MVSS 90

FMVSS 121

Certificate of Conformity

Approved Additionally/required for commercial only

34/Delay in Applying Air Brake Test

MVSS 90

FMVSS 121

Certificate of Conformity

Approved Additionally/required for commercial only

35/
Specification Measurement

MVSS 4-7

 

Certificate of Conformity

Korean standard

36/Maximum Stable Inclination Angle Test

MVSS 8

-------------

Certificate of Conformity

Korean standard/required for commercial

37/
Speedo-
meter Test

MVSS 110

--------------

E-Certificate or Manf. Test Report

Korean standard/
ECE 39

38/
Flammability

MVSS 95

FMVSS 302

Certificate of
Conformity

------------

39/Interior Compartment Door

MVSS 111-3

FMVSS 201

Certificate of
Conformity

Introduced 1/97

40/Child Seat Anchorage

MVSS 103

--------------

----------------

Korean standard Optional introduced 1/97

41/
Electromagnetic

MVSS 111-2

-------------

E-Certificate or Manf. Test Report

ECE 10 or EEC 72/245 Introduced 1/97

FN1 -FMVSS 108 can be used to meet the ROKG "turn signal" and "other light requirements except red turn signal

U.S. FMVSS: Federal Motor Vehicle Safety Standard

EEC: European Economic Community Directives

ECE: Economic Commission for Europe Regulations

SAE: U.S. Society of Automotive Engineers Recommendations

I

Annex 4

Elements of the Completion Test

Part A: Specification Measurement

(1) Exterior dimension: length, width, height

(2) interior dimension: length, width, height number of passengers

(3) Engine: power, type, displacement; transmission

(4) Weights: gross vehicle, axle, tare, permissible load

(5) Wheelbase, tread, ground clearance

Part B: Body and Frame Inspection to Check Any Malfunction

(1) VIN

(2) Engine and power train: starting mechanism, oil leakage, etc.

(3) Steering system: proper handling, fractures, free play, interference with other systems

(4) Controls and displays: distances from center of steering wheel, check if engine with automatic transmission can be started while shift lever is in drive or reverse, accelerator control return mechanism

(5) Exhaust system: opening angle, function

(6) Running gear: proper tire without any noticeable damage, proper tire pressure, tire contact pressure

(7) Brake system: performance, braking force, brake fluid level and leakage, recover

(8) Suspension: fracture, function

(9) Fuel system: distance between fuel inlet and exhaust pipe opening/electrical system

(10) Electrical system: insulation, possible damage to battery due to vibration/impact

(11) Body and frame no loosening due to vibration/impact, location of registration plate,

any damage to bumper

(12)Towing hook: no separation due to vibration/impact once engaged

(13)Hood and theft prevention: latch, locking mechanism

(14)Entrance: dimensions, head restraint, seat belt, distance between front and rear seats

(15) Window: laminated glass, tempered glass, transparency

(16) Lamp system: luminous intensity, photometric axis, color, etc.

(17) Field of vision: rear view mirror, warning sign in convex rear view mirror, wiper and washer

(18) Horn: sound tone, sound intensity

(19) Instrument: speedometer, odometer

(20) Other: other systems to be checked for compliance

Part C: Equipment Test

(1) side slip: measure side slippage while vehicle moves forward I meter

(2) CO, HC, smoke: measure concentration of harmful gases and smoke

(3) brake: measure braking forces of each axle

(4) headlamp: maximum luminous intensity

(5) speedometer: check accuracy

(6) noise: measure level

(7) liquefied petroleum gas: check for any leakage

ANNEX 5

Modifications Subject to Modified Vehicle Type Approval

When the Body and Frame Remain the Same

1. Category and style

2. Shape and material of body

3. Engine

4. Layout of axles

5. Main structure of running gear

6. Type of brake system

7. Number of passengers, maximum permissible load, vehicle weight

8. Type and main structures of steering system


TANC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.